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Financial awareness capsule_sbi_po

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FINANCIAL AWARENESS FOR SBI PO EXAM
Specially compiled for Bankersadda by Mr. A.K. Gupta, Ex – Chief Manager, PNB
NOV 2013
1. Appointments: Arundhati Bhattacharya takes over
as Chairman of SBI and becomes first ever woman to
head SBI in 206 years. S R Bansal, has taken over as
Corporation Bank’s CMD.
2. LIC gets its first woman MD: The government has
appointed Usha Sangwan, executive director
(corporate communication) at LIC and V K Sharma,
MD and chief executive officer of LIC Housing
Finance, as the two new MDs. According to the
norms, LIC can have four MDs, and a chairman, as
part of its top management. LIC is India’s largest
insurer, with 83 per cent market share in terms of
the number of policies, and 71 per cent in premium.
3. Forex reserves rise $1.83 bn in a week: Forex
reserves rose to $282.95 billion in the week ending
October 25.
4. Jignesh Shah quits MCX board, pre-empts FMC
action: Jignesh Shah, the founder-chairman of
Financial Technologies (FT) who resigned from the
MCX-SX board, quit the board of Multi Commodity
Exchange of India (MCX) as well. The resignation
follows the Rs 5,600-crore payment crisis at NSEL,
also controlled by FT.
5. Sept core sector growth signals infra recovery: In
early signs of industrial recovery, data for the eight
core sector industries’ growth in September 2013,
showed a year’s high of eight per cent, against 3.7
per cent in August. In the same month last year, the
core sector had recorded 8.3 per cent growth, the
highest since January 2009-10. The core sector
contributes around 37 per cent to the Index of
Industrial Production (IIP).
6. April-Sept fiscal deficit touches 76% of Budget
estimate: According to data released by the
Controller General of Accounts, at Rs 4.12 lakh
crore, the fiscal deficit for the first six months of
2013-14 was 76 per cent of the BE of Rs 5.43 lakh
crore. For the corresponding period last year, the
deficit stood at 65.6 per cent of the BE.
7. 'Sakala' to cover more services: 'Sakala',
Karnataka government's innovative scheme, which
promises timely delivery of government services to
citizens, will be expanded to cover more services
under various departments. The scheme that has
been lauded for bringing transparency and
accountability in the system, presently covers over
375 services of 42 departments and organisations of
the state government.
8. Karnataka to build 10,000 playgrounds in
villages: The project, under which two playgrounds

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will be built in each Panchayat, will be taken up with
the cooperation of the Departments of Revenue,
Education and Sports.
9. State Bank cuts short-term bulk deposit rate as
liquidity eases: State Bank of India, the country’s
largest lender, has reduced short-term bulk deposit
rate by 200 basis points. SBI will offer 6.5 per cent
for deposits of Rs 1 crore and above, for seven to 60
days maturity, as compared to 8.5 per cent offered
earlier.
10. Parikh panel for Rs 5 hike in diesel prices: The Kirit
Parikh committee, asked to revisit the pricing
methodology of petroleum products, has
recommended to the government an increase of Rs 5
a litre in diesel, Rs 250 a cylinder in LPG (cooking
gas) and Rs 4 a litre in kerosene with immediate
effect. It also suggested a cap on diesel subsidy by
oil marketing companies (OMCs) at Rs 6 a litre,
which along with the rise it recommends would
collectively save at least Rs 40,000 crore of the
government’s subsidy burden. It also recommended
to cap subsidised cylinders to each household at 6
from 9 now.
11. Wheat export floor price cut by $40/tone: To enable
swifter movement of wheat stocks from state
warehouses, the Union Cabinet has decided to
reduce the export floor price from $300 a tonne at
present to $260 a tone and to allow export till June
31, 2014, instead of March 31, 2014.
12. Allahbad Bank not to accept deposits from
public under West Bengal’s 'Safe Savings
Scheme': WBIDFC, a financial services company
promoted by the state government of West Bengal,
has come out with a scheme for deposits with a
minimum amount Rs 1,000. The money can be kept
for 12-60 months and will earn 9.00-9.25 per cent
interest per annum. The scheme has been launched
to offer a secured savings option to rural people in
the state, who are often cheated by illegal deposit
schemes promoted by swindlers.
13. RBI prescribes Rs 500-cr initial capital for
foreign bank subsidiaries: Foreign banks seeking
to set up subsidiaries in India would need at least Rs
500 crore as initial paid-up voting equity capital or
net worth. Though foreign lenders would be
incentivised to convert their branches here into
wholly-owned subsidiaries, subsidiarisation
wouldn’t be mandatory. The wholly-owned
subsidiaries of foreign banks would be given “near-
national treatment”, including for the opening of
branches. As of March, 43 foreign banks operated in
India, through a network of 333 branches; and, 47
foreign lenders were present in through
representative offices. According to its
commitments to the World Trade Organization,
India has to allow 12 new foreign bank branches in a
year.
14. RBI to launch inflation-indexed securities: RBI is
set to launch two new instruments by the end of this
year — inflation-indexed national saving securities
(IINSSes) and cash-settled 10-year interest rate
futures (IRFs). However, the 10-year inflation-
indexed bonds launched earlier this year, which
were linked to the Wholesale Price Index, had failed
to attract much interest from investors.
15. RBI shuts special liquidity window for mutual
funds: RBI has closed the special window for banks
to meet the cash requirements of mutual funds
(MFs). It had opened this window in mid-July to help
MFs meet sharp redemptions in fixed income
schemes, after RBI's move to make it more
expensive for participants to borrow short-term
money. The special repo window allowed banks to
borrow a total of Rs 25,000 crore at 10.25 per cent
for MFs.
16. Reserve Bank expects trade deficit to moderate
in Q2: India’s CAD widened from 3.6 per cent of
gross domestic product (GDP) in the fourth quarter
of 2012-13 to 4.9 per cent of GDP in the first quarter
of 2013-14. Inflows from foreign institutional
investors, which had turned negative since end-May,
reversed in September. Since the introduction on
September 10 of the swap facility for foreign
currency non-resident account (banks) or FCNR(B)
deposits and bank foreign borrowings, $6.9 billion
and $4.4 billion had been received under the
respective schemes until October 25.
17. FinMin relaxes norms for CMD jobs in PSBs:
Executive directors (EDs) appointed merely a couple
of months earlier would now be allowed to appear
in the interviews. Earlier, one needed to have
completed a year as ED. However, the criteria for
residual service of two years of a candidate hasn’t
been changed. A selection committee headed by RBI
Governor will interview 19 EDs of various PSBs for
six positions that will become vacant in the next
financial year, 2014-15. In the present financial year,
chairmen of four PSBs will retire. The government is
yet to fill vacancies in two, Andhra Bank and Bank of
Maharashtra, where the chairman had retired in the
past couple of months.
18. Gold smuggling surges with govt's import curbs:
Gold worth Rs 130 crore was seized from 383 cases
in April-September against Rs 28 crore from 339
cases in the year-ago period, an increase of 360 per

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cent in value terms. In volume, it went up from 99 kg
to 500 kg in the first half.
19. World Bank slashes GDP growth forecast to
4.7%: The Bank also pegged the current account
deficit (CAD) at 4.1 per cent of GDP in 2013-14,
significantly higher than the 3.7 per cent hoped by
the ministry. The Bank believes the RBI should
probably look at core or manufactured product
inflation, rather than food inflation, to decide on its
monetary stance. The International Montery Fund,
had projected GDP to grow 4.25 per cent in FY14.
The Prime Minister's Economic Advisory Council
(PMAEC) had cut India's growth forecast to 5.3%
from its earlier projection of 6.4% for the current
financial year. The finance ministry too expects the
economy to grow above the 5%. The Planning
Commission expects India's economy to clock a
growth rate of 5.3 per cent for the current financial
year, a shade higher than a decadal low of five per
cent in the previous year.
20. India may use forex reserves to finance CAD:
According to World Bank, India may have to dip into
its foreign exchange reserves to finance the current
account deficit (CAD) in 2013-14 but the reserves
would still amount to a comfortable import cover of
approximately five months.
21. FinMin asks ministries to buy tickets from Air
India directly: The move is part of government's
austerity measure to restrict the fiscal deficit to the
budgeted figure of 4.8% of GDP in 2013-14.
However, if it is not possible to obtain tickets
directly from Air India/Airlines counters, they may
obtain the services of three authorised travel agents
-- Balmer Lawrie & Company (BLCL), Ashok Travels
& Tours (ATT) and Indian Railways Catering and
Tourism Corp (IRCTC).
22. Centre eases eligibility criteria for UMPPs: For
setting up ultra-mega power projects (UMPPs), the
capital cost requirement for UMPPs used to be 10
per cent of the overall project cost and earlier norms
took into account expenditure by prospective
developers over five years. Now, the total capital
cost requirement, has been brought down to five per
cent of the overall project cost and the expenditure
incurred by the companies on projects in the past
seven years will be counted.
23. End of the road for tax breaks: Union Commerce
Minister Anand Sharma has said that the centre
would announce a new package without tax
incentives for Uttarakhand and Himachal Pradesh.
The tax breaks in these states expired on March 31,
2010.
24. E-KYC to be accepted for verification: As per
IRDA, the e-KYC (electronic know-your-customer)
services operationalised by the Unique
Identification Authority of India (UIDAI) will be
accepted as valid KYC process for insurance. Earlier,
a letter issued by the UIDAI containing details such
as name, address and Aadhaar number was a valid
document for customer identification.
25. 25 mn small borrowers' data now a click away:
Equifax Credit Information Services and High Mark
Credit Information Services are the two credit
bureaus that collate data from MFIs. So far, details of
100 million loan accounts belonging to 25 million
individual customers have been collected. These
loan accounts have a gross loan portfolioof Rs
21,300 crore as of June. The data thus collected is
used to assess over-indebtedness and instances of
multiple lending among borrowers. According to
RBI norms, not more than two MFIs or non-banking
finance companies should lend to the same
borrower with an individual cap of Rs 50,000.
26. RIL first Indian private sector firm to clock Rs 1-
lakh-cr sales in a quarter: Reliance Industries
became the first private sector company in the
country to achieve quarterly turnover or sales of
more than Rs 1 lakh crore in a quarter. Its turnover
during the quarter stood at Rs 1,06,523 crore,
against Rs 93,266 crore in the previous quarter.
27. To unlock FDI, govt to ease lock-in period for
realty: Foreign real estate developers, investing in
India’s construction sector might be allowed to exit
before the mandatory three years stipulated at
present. However, for that, they would have to
complete the project and procure completion
occupancy certificates from local authorities. India
allows 100 per cent FDI through the automatic route
in townships, housing, built-up infrastructure and
construction-development projects.
28. Economy moving towards stagflation: CII survey
of CEOs has indicated the economy was moving
towards stagflation. Stagflation refers to a situation
where economic growth is too low and inflation is
too high, leading to high unemployment levels. The
situation indicates a dilemma for policymakers,
since actions designed to cut inflation may aggravate
unemployment.
29. Government lists draft rules to implement Land
Acquisition Act: The rules are with a focus on
consent and social impact assessment to ensure the
rights of the farmers were protected when the land
was acquired. According to the rules, all social

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impact assessment documents and consent
proceedings will be made publicly available. The
Right to Fair Compensation and Transparency in
Land Acquisition, Rehabilitation and Resettlement
Act, 2013 stipulates mandatory consent of at least
70 per cent for acquiring land for Public Private
Partnership (PPP) projects and 80 per cent for
acquiring land for private companies.
30. Big banks can be dismantled: According to US and
UK regulators, even one of the largest global banks
could be taken apart safely by US government
authorities if it were to fail today. The 2010 Dodd-
Frank Act empowered the FDIC (Federal Deposit
Insurance Corporation) to seize a firm and
dismantle it if regulators think it can't pass through
bankruptcy without posing a significant threat to the
financial system.
31. Despite negative list, service tax coverage yet to
increase: The introduction of a negative list in July
2012 had given the government the power to tax all
services, except the 17 on the list. But it was difficult
for service tax commissioners to map each activity
and determine whether it is a service. The total
number of taxable services has increased from three
in 1994 to 119 in 2012. Service tax collections
accounted for just over 12 per cent of the total tax
collections and over 28 per cent of indirect tax
collections in 2012-13.
32. Centre to raise wheat support price by Rs 50 a
quintal: The Cabinet Committee on Economic
Affairs (CCEA) has approved an increase of Rs 50 a
quintal in the procurement price of wheat. It will be
now Rs 1,400 per quintal for the 2014-15 crop year
(April-March). CCEA also approved an increase of Rs
50 for mustard MSP, to Rs 3,050 a quintal. The
support price for chana (gram) was raised by Rs 100
to Rs 3,100 a quintal. For masur, the MSP was
increased by Rs 50 to Rs 2,950 a quintal and
safflower by Rs 200 to Rs 3,000 a quintal. The
increase in wheat MSP is the same as recommended
by the government advisory body, Commission for
Agricultural Costs and Prices (CACP).
33. HSBC to exit Indian retail broking and
depository biz: Hongkong and Shanghai Banking
Corporation (HSBC) has decided to discontinue its
retail broking and retail depository services
businesses in India. It was operating these under
HSBC InvestDirect Securities (India) Ltd. HSBC
InvestDirect Securities (India) is an arm of HSBC
InvestDirect (India), which also offers investment
advisory services and securities- related financing.
34. Parikh panel says no to export parity for OMCs:
The Kirit Parikh committee has ruled out any change
in the way of calculating under recoveries on the
basis of traded-parity pricing. The export-parity
price is the benchmark free-on-board price of
products, import-parity pricing includes import duty
and various expenses, such as freight and insurance
incurred to import products to India. At present,
subsidy is calculated in terms of import-parity
pricing — 80 per cent of the import parity price and
20 per cent of the export-parity price.
35. New RTGS system to improve financial market
efficiency: According to RBI Governor Raghuram
Rajan, the new real time gross settlement (RTGS)
system for fund transfers will improve the efficiency
of the country’s financial markets, with its advanced
liquidity and queue management features. It will
have features such as a facility to accept future value
dated transactions and options to process multi-
currency transactions.
36. RBI sets up advisory panel for national bill
payment system: RBI has constituted an advisory
group to implement a national bill payment system
enabling households to pay utility bills, school fees
and remittances using their bank accounts. The
group is headed by Umesh Bellur of the Indian
Institute of Technology-Bombay. The panel would
suggest the nature of the payment platform—either
an existing one or through a new entity—for Giro
(general inter-bank recurring order)-based bill
payments. A Giro is a payment instruction from one
bank account to another. It facilitates payments
through cash, cheques, credit/debit cards and
prepaid payment instruments, transferring funds to
the bank accounts of beneficiaries.
37. Govt to give Rs 14,000 cr to PSBs: The government
will infuse capital of Rs 14,000 crore in public sector
banks (PSBs) this financial year, including Rs 2,000
crore to the State Bank of India and Rs 1,800 crore
each in IDBI Bank and Central Bank of India. The
banks can raise another Rs 10,000 crore from the
market, depending on their requirements through a
rights issue, follow-on public issue and qualified
institutional placement (QIP).
38. Gujarat govt announces new agriculture power
scheme: The scheme is named 'Immediate Power
Connection Scheme 2013'. Under the new
immediate power connection scheme, applicants
will have to bear 80 per cent of the power
connection cost and will also have to adopt drip
irrigation technique.
39. RBI appoints Technical Committee on Mobile
Banking: The Committee will examine the
options/alternatives including the feasibility of
using encrypted SMS based funds transfer using an
application that can run on any type of handset for
expansion of mobile banking in the country. The
Committee will be headed by Shri B. Sambamurthy,
Director, Institute for Development & Research in
Banking Technology (Chairman).
40. UP promoting guar farming to increase agri
income: To maximise farm income and insulate
farmers from seasonal losses, Uttar Pradesh

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government is promoting guar farming, especially in
the arid region of Bundelkhand. Guar provides
better returns to farmers compared to other cash
crops, including paddy and wheat.
41. FM tells PSBs to step up NPA recovery: Finance
Minister P Chidambaram has asked PSBs to monitor
30 big bad debt accounts each.
42. RBI measures got $9.6 bn in forex: India has
received over $9 billion from two foreign schemes
namely RBI's liberalisation of FCNR(B) and tier-I
capital schemes which were announced in Sept to
attract foreign funds and help the country bridge the
widening current account deficit.
43. Arunachal, Meghalaya to be on railways map
soon: Three of the five key railway projects
identified by the Prime Minister’s Office (PMO) as
“critical” for the region are nearing completion.
44. Discoms' dues to PSUs more than double in 3 yrs:
With last year’s restructuring package for loss-
making power distribution companies yet to bear
fruit, the dues that discoms owe state-owned
generation firms jumped to Rs 15,792 crore last
month, compared with Rs 6,200 crore in June 2010.
Damodar Valley Corporation (DVC), which runs
power plants with a cumulative capacity of over
2,800 Mw in Jharkhand and West Bengal, alone
accounts for Rs 5,900 crore of the dues.
45. WPI inflation edges up to 6.46% in September:
Headline inflation accelerated to a seven-month
high of 6.46 percent in September, mainly driven by
higher food prices. Wholesale prices, India's main
inflation measure, had risen 6.1 percent in August.
46. India becomes leading rice supplier to
Singapore: India has overtaken Thailand as
Singapore's biggest rice supplier for the first time,
exporting 92,865 tonnes or 32.9 per cent of the total
rice supply to the island nation in the first eight
months of 2013.
47. Financial literacy among urban working young
people low: According to a study by IIM
Ahmedabad, despite high education levels, working
young people in urban India don't fare well as far as
financial literacy is concerned. This is likely to be
due to the absence of inputs relevant to financial
literacy in the general education process.
48. Electronic payment can save 1.6% of India's
GDP: According to a World Bank Report, cash can
carry significant handling and transportation costs,
and run the risks of theft, loss, and counterfeiting.
The report stated that individuals and small firms
that make use of this technological medium benefit
from convenient online authorisations, easier record
keeping, and the availability of dispute resolution
mechanisms.
49. Industrial output growth slows to 0.6% in
August: The growth in July was 2.7 per cent and in
August 12, it was two per cent.
50. Health Insurance TPA of India formed, for govt-
owned general insurers: The common in-house
third party administrator (TPA) of public sector
general insurers, named Health Insurance TPA of
India, was incorporated on August 14. The
operationalisation is likely to happen by April 2014.
This common TPA to process health claims has
National Insurance Company, New India Assurance
Company, United Insurance Company, Oriental
Insurance Company and General Insurance
Corporation of India as stakeholders. While the first
four have 23.75 per cent stake each, GIC has five per
cent. The common TPA has been proposed to
prohibit large-scale leakages while settling
insurance claims in the health segment. Further, it is
intended to process claims of public general
insurers in-house, rather than handling by an
external agency.
51. 2014-18 growth at 5.9%: According to the Paris-
based Organisation for Economic Cooperation and
Development (OECD), India is projected to see
moderate average annual growth of 5.9 per cent
during the 2014-18 period. The forecast for India is
much lower than OECD's estimated growth of 6.9
per cent for overall emerging Asia during the same
period. Emerging Asia comprises Southeast Asian
nations, China and India.
52. UIDAI Bill to give Aadhaar statutory status gets
nod: To give a statutory recognition to the Unique
Identification Authority of India (UIDAI), the Cabinet
has approved a National Identification Authority of
India Bill. The proposed legislation seeks to create a
National Identification Authority of India, which will
oversee the implementation of the Aadhaar project
and “regulate it”. It also seeks to define the penalties
in case of misuse of the data collected under the UID
project. These cover impersonation using Aadhaar
data; unauthorised collection or dissemination of
information, and unauthorized access to the central
database, which will contain all individual details
such as biometrics collected for Aadhaar.
53. IMF pegs FY14 growth at 4.25% on weak
demand: The International Monetary Fund pegged
the country's economic growth at 4.25 per cent. IMF
attributed low growth to poor demand and weak
manufacturing as well as services sector
performance. If India's economy grows by this rate,
it would be the lowest economic expansion in 11
years. Before this, the economy grew by lower rate
of 4 per cent in 2002-03. IMF also predicted that the

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retail-price inflation will remain high at 11 per cent
this year owing to food price pressures.
54. Aadhaar-based remittance & query services
launched: The National Payments Corporation of
India has launched two new services, an Aadhaar-
based Remittance Service (ABRS) and a Query
Service on Aadhaar Mapper (QSAM). ABRS will
enable transfer of funds by using an Aadhaar
number. The QSAM service will enable mapping
one's status by using an Aadhaar number. There are
more than three crore (30 million) Aadhaar-linked
bank accounts.
55. Nabard expects to benefit from its new
warehousing scheme: Nabard Warehousing
Scheme 2013 -14 (NWS) which has a corpus of Rs
5,000 crore, envisages disbursing direct loans for
construction of warehouses, silos, cold storage and
cold chain infrastructure. The warehouses and cold
storage created from this scheme will be compliant
to Warehousing Development and Regulatory
Authority ( WDRA) norms, which could facilitate
pledge loan against stored commodities.
56. FinMin asks public sector banks to ramp up
rural ATMs: The PSU banks have put up only 5,726
ATMs by end of August as against the target to
install 34,668 by the end of March 2014. Further,
Direct Benefit Transfer Scheme, which was initially
launched in 25 districts early this year, has been
extended to 78 districts. The government has
identified 191 districts more to introduce the DBT-
LPG scheme, which will be done in a phased manner.
57. RBI allows banks to borrow from international
and multilateral financial institutions: RBI has
granted permission to banks to borrow from
international/ multilateral financial institutions for
a limited period of up to November 30. Such
borrowings should be for the purpose of general
banking business and not for capital augmentation.
Such borrowings shall be eligible for the
concessional swap facility of RBI.
58. Bharti and Walmart call off their retail JV: Bharti
and Walmart, after staying together for six years in
cash-and-carry, have decided to independently
pursue their retail businesses in India. Walmart will
fully own the cash-and-carry business, buying out
Bharti’s 50 per cent stake.
59. Aadhaar-linked accounts to be basis for mobile
payments: Government is launching a payment
facility where mobile-to-mobile payments could be
singularly effected through the Unique Identity
(UID) number. Under the Aadhaar-linked payment
bridge, individuals’ UID numbers would be linked
with their bank accounts at the back-end. A PIN will
be used for authenticating debits, putting a layer of
security on transactions. The Aadhaar-based
remittance system on mobile will make transferring
money easy by removing the need to remember
bank account details, such as IFSC code, etc, as users
will only need their Aadhaar numbers.
60. Bihar registers highest industrial growth among
BIMARU states: As per a study by ASSOCHAM,
Bihar has registered highest growth rate of 14
percent in the industrial sector during nine years
period of 2004-2012 among BIMARU category
states -Bihar, Madhya Pradesh, Rajasthan and Uttar
Pradesh. However, lack of land, power and health
services and poverty may hamper Bihar's prospects
in future.
61. Mandatory training for agents puts pressure on
insurers: Licensing rules by Irda stipulate that
agents have to undergo 50 hours’ training for basic
licence and 75 hours’ training for composite licence.
Insurance agents also have to undergo a 25-hour
practical training to renew their licence, which is
valid for three years. Composite agents will have to
undergo a practical training of 50 hours if they want

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to renew their licence. According to earlier rules
formulated in July 2000, mandatory training was
100 hours for insurance agents and 150 hours for
composite agents who were entering the industry
for the first time. This was reduced to 50 hours and
75 hours, respectively, in October 2007. The
insurers want reduction in training hours. Various
estimates suggest approximately Rs 600-650 crore
is spent annually by insurance companies on
training their agents.
62. RBI may make bank licensing process more
frequent: To expand the reach of banking, RBI is
considering making the licensing process more
frequent and allow free entry of banks as and when
necessary.
63. All national, state highways in Punjab to be
four/six-laned by January 2016: The Punjab
government is working to realise its target of 4/6
laning of all national and state highways by January
2016 and has set aside Rs 3,080 crore for the
purpose. This distinction of world-class connectivity
would help Punjab to attract more investment and
ease traffic on the roads thereby in the coming
years.
64. April-Aug fiscal deficit swells alarmingly: Rise in
Plan expenditure has pushed the central
government’s fiscal deficit to 74.6 per cent of the
entire year’s Budget estimate (BE) at the end of only
the first five months of the current financial year.
The fiscal deficit in the first five months of a
financial year was higher than 75 per cent of BE only
in 2008-09, when the global financial crisis began.
But that year, BE was just 2.5 per cent of GDP and it
turned out to be more than eight per cent when the
year ended.
65. FM heat on unregulated financial sector:
According to Finance Minister, Chidambaram, a
financial consumer is comfortable to participate in a
regulated market and there should be an assurance
that she will be protected. However, exploiting the
limitations of the regulatory architecture, ingenious
financial engineers come up with innovative
products outside the regulatory jurisdiction and
deprive the consumers with such products from
regulatory protection. There have been five
institutional milestones in Indian corporate financial
institutions in the last six months — FSLRC report,
new Companies Act, the passage of Pension Fund
Regulatory and Development Authority (PFRDA)
Bill, placing commodity futures market regulation
under the finance ministry and the re-promulgation
of the Security Laws Amendment Ordinance.
66. SC upholds HC order on CNG to Gujarat under
APM: The Supreme Court has directed the Union
government to provide compressed natural gas
(CNG) to Gujarat on the same rate as it is given to
Delhi and Mumbai. But at the same time, the state
government will have to pass necessary laws to
make it compulsory for all four wheelers registered
in Gujarat to covert to natural gas.
67. India shoring forex reserves to deal with
tapering: According to Mr P Chidambaram, Union
Finance Minister, India is shoring up its forex kitty
to deal with the impact of US tapering. Tapering
refers to gradual withdrawal of monetary stimulus
by the US Federal Reserve. The reversal of the easy
money policy by the US is expected to impact the
global markets as well as the economy.
68. NABARD takes to pvt sector financing: National
Bank for Agriculture and Rural Development
(NABARD) has opened a lending window to the
private sector for creation of warehouse space, cold
storages and cold chains. This is besides financing to
state governments, state government undertakings,
(special purpose vehicles) SPVs set up under PPP
mode, cooperatives, federations, cooperative
federations, (Agricultural Produce Market
Committees) APMCs, state-level boards, apex
marketing boards' bodies and panchayats for
creation of scientific storage space for food grains
and other agricultural commodities and perishables.
69. Life insurers get 3 months to phase out old
products: The Insurance Regulatory and
Development Authority (Irda) has extended the
deadline for phasing out old products in the
traditional segment to December 31. The earlier
deadline was October 1. However, the sale of highest
net asset value (NAV) products and index-linked
products in the life insurance segment has been
banned from October 1.
70. Punjab University steals a march over IITs in
global rankings: According to the Times Higher
Education World University Rankings, while Panjab
University, is placed at 226 among 400 institutions
worldwide, IIT Kharagpur has slipped from 226 to
250 and IIT Roorkee is placed in the 351-400 band.
The two other new entrants are IIT Delhi and
Kanpur, both in the 351-400 group. India has
increased its representation in the world rankings
with five world top 400 universities. Overall,
California Institute of Technology holds on to the
world number one spot for the third consecutive
year, while Harvard University tied with Oxford
regains second place, pushing Stanford University to
fourth. The US remains dominant with seven
institutions in the world top 10 and 77 in the top
200 (one more than last year).

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71. 5-kg gas cylinders from Oct 5: As part of a series of
customer empowering initiatives, the Ministry of
Petroleum and Natural Gas is set to commence the
sale of five-kg gas cylinders at market-linked prices
through selected petrol pumps in major cities. The
ministry is also launching portability of LPG
connection across oil marketing companies (OMCs)
on the same day. The first initiative allows the sale
of these LPG cylinders at the market price with
minimal paperwork through company- owned retail
outlets (petrol stations). Under this portability
scheme, a consumer can now opt for the distributor
of his choice within a cluster of LPG distributors in
the vicinity and across the oil companies.
72. ADB cuts FY14 GDP growth forecast to 4.7%: The
multi-lateral agency said the Indian economy has
been under pressure with the recent depreciation of
the rupee and capital outflows, adding to structural
constraints, which is making it difficult for the
economy to return to a high growth path.
73. Poor are more trustworthy and bankable:
Seeking to promote financial inclusion, Finance
Minister P Chidambaram has called upon banks to
focus on poor customers who were more
trustworthy and "bankable" as compared to large
borrowers.
74. RBI forms crack team to help Jalan vet bank
licence bids: RBI has nominated three members to
the advisory committee formed to scrutinise bank
licence applications. Former Securities and
Exchange Board chairman C B Bhave, former RBI
deputy governor Usha Thorat and central bank
board member Nachiket Mor would assist Bimal
Jalan, former RBI governor, to vet the applications.
The central bank is conducting the initial screening
of the 26 applications.
75. India to start power supply to Bangladesh: India
will start supplying electricity to Bangladesh
through the new transmission line between the two
nations. Transmission line will link India's eastern
power grid with the western electricity grid of
Bangladesh.
76. India's share in M&As of emerging nations is a
mere 5.1%: This is lowest in the BRIC (Brazil,
Russia, India and China) nations. China led the
emerging market activity with $107.1 billion (32 per
cent market share), followed by Russia ($52.1 billion
or 15.7 per cent), Brazil ($35.3 billion or 10.7 per
cent) and India ($17 billion or 5.1 per cent).
77. Regulators' pay raised by Rs 75,000 a month
from July: Chairpersons and full-time members of
regulatory bodies would now draw higher salaries,
with the Cabinet approving raises of Rs 75,000 a
month, with retrospective effect from July. Now, a
chairperson would get Rs 4.5 lakh a month (without
house and car), against Rs 3.75 lakh earlier. A full-
time member would draw Rs 3.75 lakh (without
house and car) a month, against Rs 3 lakh earlier.
The raises would benefit chairpersons and members
of the Securities and Exchange Board of India, the
Insurance Regulatory Development Authority, the
Telecom Regulatory Authority of India, the Central
Electricity Regulatory Commission, the Competition
Commission of India, the Pension Fund Regulatory
and Development Authority, the Petroleum and
Natural Gas Regulatory Board, the Warehousing
Development and Regulatory Authority and the
Airports Economic Regulatory Authority of India.
78. Clones of existing banks: Finance Minister P
Chidambaram has said “several” new banks, licences
for which would be issued by the Reserve Bank of
India shortly, should have a differentiated approach
rather than becoming clones of existing banks. Each
one of them should cater to the needs of a special
group of customers who do not have banking today.
Each one must pursue a different path. While
Singapore has five different kinds of licences, Hong
Kong has a three-tier structure.
DEC 2013
1. Rich get poorer in India, other emerging
nations: According to World Ultra Wealth Report
2013 from UBS AG and Wealth-X, India’s
billionaire club shrinks by 5% losing six members
to become 103 last year; their combined wealth
also declined by the same percentage. Mumbai is
home to 30 billionaires, of which, one in three is
associated with industrial conglomerates or the
pharmaceuticals industry.
2. WTO Bali meet: The Right to Food Campaign, an
umbrella of about a 100 non-profit organizations
have appealed to the Government to reject the
peace clause proposed by developed countries
and safeguard India’s food sovereignty while
negotiating at the World Trade Organisation’s
(WTO) Bali Ministerial meet to be held from
December 3 to 6. The four-year Peace Clause has
been proposed by the developed countries as a
compromise formula to provide protection to
developing countries against penalties for
breaching the farm subsidy limit.
3. Bank unions demand 5-day week: Trade
unions in the banking sector have demanded 5
days week as part of their bipartite wage

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negotiations as there are alternative channels
such as ATMs, Internet and mobile banking for
banking operations.
4. Reliance Life ties up with five insurance
repositories: Reliance Life Insurance Company
(RLIC) has tied with all five insurance
repositories to provide life insurance policies in
electronic form across all its products. The
Insurance Regulatory and Development
Authority (IRDA) has approved five companies
— Database Management Ltd, Central Insurance
Repository Ltd, SHCIL Projects Ltd, CAMS
Repository Services Ltd and Karvy Insurance Ltd
— as insurance repositories (IRs).
5. M. V. Tanksale is IBA’s new chief executive:
M.V. Tanksale, former Chairman and Managing
Director of Central Bank of India, has taken over
as Chief Executive of the Indian Banks’
Association. Tanksale succeeds K. Ramakrishnan,
who was at the helm of the Association for five
years up to November 30, 2013.
6. SEBI extends ESOP deadline: SEBI has extended
the timeline for employee welfare trusts for
aligning their schemes with the SEBI ESOP/ESPS
guidelines to June 30 next year. In January 2013,
SEBI had prohibited employee welfare trusts
from purchasing shares of the company from the
secondary market.
7. FMC nod for S. Mishra as MCX Chairman: The
commodity market regulator Forward Markets
Commission has approved the appointment of
Satyananda Mishra (IAS Retd) as the Chairman of
Multi Commodity Exchange.
8. India seeks Australia’s help in skills training:
As per HRD Minister M. M. Pallam Raju, the
availability of good quality trainers is a
significant challenge as India raises its efforts to
meet the national goal of skilling 500 million
people by 2022. The Ministry of HRD has
launched an ambitious programme under the
national vocation education qualification
framework of the AICTE to provide for skill
development in schools in classes 9 to 12.
9. Fiscal deficit touches 84% of Budget target:
According to data released by the Controller
General of Account (CGA), the deficit in the first
seven months of the current fiscal touched Rs
4.58 lakh crore against the target of Rs 5.42 lakh
crore for full year. This is 84.4 per cent of the
target. This increase is due to low tax collections,
while both Plan and non-Plan expenditure has
gone up. Fiscal deficit is mainly the difference
between income and expenditure of the
Government. Higher deficit means, Government
will borrow more from the market. This can
drain the liquidity from the market leading to
increase in interest rates.
10. Sahoo panel submits review report on GDRs,
FCCBs: The M.S. Sahoo Panel that was set up to
undertake a comprehensive review of the global
depository receipts (GDR) scheme has submitted
its report. The committee is understood to have
reviewed the GDR scheme of 1993 in the light of
legislative changes in the financial sector and
macroeconomic developments besides the
enactment of a new company law.
11. Threshold limit for e-payment of excise,
service tax lowered: The Centre has lowered
the threshold limit for mandatory e-payment of
excise duty and service tax to Rs 1 lakh from Rs
10 lakhs earlier. With effect from January 1, a
manufacturer or a service taxpayer who has paid
duty or tax of more than Rs 1 lakh in the previous
financial year will be required pay duty or tax
through internet banking.
12. Don’t bank on incentives, tax sops: According
to Financial Services Secretary Rajiv Takru,
Pension funds should look to maximise returns
and improve their reach rather than seek
incentives and tax breaks.
13. Monitoring MFIs - Self-regulatory
organisations get RBI recognition: To ensure
effective functioning of Non-Bank Finance
Company-Microfinance Institutions (NBFC-MFIs),
the RBI has decided to recognise self-regulatory
organisations for monitoring such institutions. At
present, there are two SROs — Micro Finance
Institutions Network (MFIN) and Sa-dhan —
monitoring the functioning of NBFC-MFIs in the
country. However, SRO as a body was not
recognised by the RBI.
14. Foreign banks taking subsidiary route to get
capital gains tax exemption: As per RBI, foreign
banks that wish to convert their branch holding
operations in India into wholly-owned
subsidiaries will be exempt from capital gains tax
and stamp duty.
15. RBI nod for NHB’s $200-million overseas
loan: National Housing Bank has received RBI
approval for raising $ 200 million external
commercial borrowing under the affordable
housing window.
16. Police orders closure of over 1,000 ATMs in
Bangalore: Bangalore Police has ordered the
shutdown of 1,037 ATM centres in Bangalore.
The State Government had ordered banks to post
security personnel and install CCTV cameras
(both inside and outside) all ATM sites.

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17. IRDA plans unique identity code for hospitals:
In a major step to bring down frauds in health
insurance, the Insurance Regulatory and
Development Authority and the Insurance
Information Bureau (IIB) have started an
initiative to provide a unique identity code for
hospitals. The step will help the health insurance
industry streamline and identify the charges for
different treatments by different hospitals.
18. Bank frauds rising: Double to Rs 6,212 cr in
2012-13: Bank loan frauds almost doubled in
2012-13 adding up to Rs 6,212 crore against Rs
3,183 crore in the previous year. In terms of
numbers, 349 cases of fraud of over Rs 1 crore
were reported in 2012-13 up 28 per cent over
the previous year’s 273 cases.
19. Sarfaesi Act most effective tool to recover bad
loans: According to the RBI’s Report on Trend
and Progress of Banking in India, 2012-13, banks
have recovered Rs 18,500 crore through the
Sarfaesi route. Also, in terms of efficiency, the Act
has proved to be more effective than the debt
recovery tribunals (DRTs) or mediation by Lok
Adalats.
20. RBI troubled by loan quality of banks: In its
report, Trend and Progress of Banking in India,
2012-13, the RBI observed that the banking
system’s loan quality, primarily in the industrial
and infrastructure sectors, has deteriorated
significantly during the year and there was an
increase in total stressed assets. The banking
system’s total stressed assets (bad loans plus
restructured standard loans) rose to 9.2 per cent
of total advances as on March-end 2013 against
7.6 per cent as on March-end 2012. While the
primary driver of the deteriorating loan quality
was the domestic economic slowdown, other
factors such as delays in obtaining statutory and
other approvals as well as lax credit
appraisal/monitoring by banks were also
significant. Further, higher credit concentration
in certain sectors and higher leverage among
corporates also increased the stress on loan
quality.
21. RBI for diluting Govt stake in public sector
banks: As per RBI, the current level of
Government shareholding in public sector banks
gives it sufficient headroom for diluting its stake
in many of these banks. The Government’s
shareholding in the 21 public sector banks
ranges from 55 per cent to 82 per cent.
22. Private banks racing ahead of public sector
ones in setting up ATMs: The total number of
ATMs in the country rose to 1.14 lakh in 2012-13,
with the growth primarily driven by private
sector banks. Their share in the total increased
38 per cent as of March 2013. Although urban
and metropolitan centres accounted for over 65
per cent of the total ATMs, there has been a rising
trend in those located in the rural and semi-
urban centres in the recent years. India’s largest
lender State Bank of India topped in the number
of ATMs at 32,777 as on September 30. Among
the private sector banks, Axis Bank had the
highest number at 11,796.
23. Weak rupee has no significant impact on
creditworthiness: According to Fitch Ratings,
the spillover effects of a weaker rupee have not
significantly hurt India’s creditworthiness, and
hence would not trigger any rating action at this
point.
24. Complaints against foreign, private banks on
the rise: A per RBI Report on Trend & Progress
of Banking 2012-13, despite the common
perception of dissatisfaction from services of
public sector banks, the per bank
branch/account number of complaints in the last
fiscal was higher for foreign and private sector
banks. In 2012-13, there were 1,543 complaints
per 100 bank branches of foreign banks, highest
among all bank groups. Complaints in Tier-I cities
— New Delhi, Mumbai, Chennai, Kolkata,
Bangalore and Hyderabad — account for more
than half the total complaints received by 15
Banking Ombudsman offices.
25. Banks’ investment in G-Secs must come down
gradually: As per RBI, it is necessary to reduce
banks’ requirements of investing in government
securities in a calibrated way, to what is strictly
needed from a prudential perspective. The scope
for such reduction will increase as government
finances improve.
26. First bank for women: Bhartiya Mahila Bank
has started operations. Usha
Ananthasubramanian, is the bank’s first
Chairperson and Managing Director. BMB, has
been set up with a capital base of Rs 1,000 crore.
27. 29 developers get more time to complete SEZ
projects: Twenty-nine developers of Special
Economic Zones (SEZ), including Tata
Consultancy Services, Navi Mumbai SEZ and
Parsvnath have been given more time by the
Government to execute their projects. Global
slowdown and fluctuating market conditions
were among the top factors cited by the
developers for the delay in their projects.
28. Banking on low-cost outsourcing model:
Bharatiya Mahila Bank (BMB) is the only bank to
be built completely on a low-cost outsourcing
model. While the bank will focus on acquiring
and servicing customers and speeding up the

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process of financial inclusion through the low-
cost outsourcing model, back-end services such
as debit and credit card management, digital and
mobile banking, asset-liability management and
ATM management will be taken care of by US-
based banking technology company FIS.
29. Moody’s maintains negative outlook on
banking sector: UBS downgraded India to
‘neutral’ from ‘overweight’ even as it upgraded
China to ‘overweight’. Global ratings agency
Moody’s Investors Service maintained its
negative outlook on India’s banking system,
reflecting the negative effects of currency
volatility, persistent inflation and slowing
economic growth.
30. Process of deregulating diesel prices will
continue: As per Veerappa Moily, Minister of
Petroleum & Natural Gas, had it not been for the
steep fall in the rupee recently, he would have
completed the process of diesel deregulation.
31. Bharat Ratna for Sachin, C.N.R. Rao: The Union
Govt has announced conferring the Bharat Ratna
on Sachin Tendulkar who becomes the first
sportsperson to receive the nation’s highest
civilian honour. Eminent scientist C. N. R. Rao has
also been conferred the award.
32. Bancon 2013: Bankcon held in Mumbai was
hosted by Bank of India. The theme of the
conference was ‘Banks of the future: Gearing up
to meet the emerging environment’.
33. Withdrawal of application for New Bank: RBI
had, on July 1, 2013 placed on its website a list of
26 applicants for new bank licences in the private
sector. The following applicants have withdrawn
their applications for establishment of New
Banks as per RBI policy – (a) Tata Sons Limited;
(b) Value Industries Limited, Aurangabad.
Application of K. C. Land & Finance Ltd.,
Chandigarh has been included in the list.
34. RBI extends Liquidity Support to Micro, Small
and Medium Enterprises: RBI has decided to
provide refinance of an amount of Rs 5,000 crore
to the Small Industries Development Bank of
India (SIDBI). The refinance will be available for
direct liquidity support to finance receivables,
including export receivable, to MSEs by SIDBI or
for liquidity support to MSEs through selected
intermediaries, that is, banks, Non-Banking
Financial Companies (NBFCs) and State Finance
Corporations (SFCs). The refinance will be
available against receivables, including export
receivables, outstanding as on November 14,
2013 onwards. The facility will be available at the
prevailing 14-day term repo rate for a period of
90 days. During this 90-day period, the amount
can be flexibly drawn and repaid. At the end of
the 90-day period, the drawal can also be rolled
over. The refinance facility will be available for a
period of one year up to November 13, 2014.
35. Chakrabarty blames public sector banks for
sitting on bad loans: As per RBI Deputy
Governor K.C. Chakrabarty, public sector banks
sat on NPAs far longer than their private sector
counterparts. According to him, (a) NPAs had
started rising from 2007, before the financial
crisis; (b) Private sector banks and even foreign
banks have been able to deal with the NPA
menace better and these banks identified the
problem earlier; (c) when regulations are
tightened, asset quality improves; (d) Prudential
norms (like higher provisioning) are in the
interest of the banks; (e) for government
companies, the project appraisal has to be more
stringent. The more powerful the borrower, the
appraisal has to be more stringent.
36. Onion, food items push wholesale inflation to
8-month high of 7%: The Wholesale Price Index
(WPI) for October rose to 7 per cent from 6.46
per cent in September. The retail inflation,
represented by the Consumer Price Index (CPI),
rose 10.09 per cent in October from 9.84 per cent
in September.The core inflation (reflecting
mainly prices of manufacturing goods) also rose
to 2.6 per cent in October from 2.1 per cent in
September. Costlier vegetables, especially onion,
and food articles are to blame for the wholesale
price and retail inflation.
37. Bad loans of 40 listed banks rise 38% in H1:
The net NPAs of 40 listed banks as on March 31,
2013, were Rs 93,109 crore, which rose to Rs
1,28,533 crore as on September 30, 2013. Of the
40 listed banks, 14 have reported more than 50
per cent jump in net NPAs. period.
38. Power sector fuels modest recovery in factory
output: Industrial production recorded a growth
of 2 per cent in September against a contraction
of 0.7 per cent in the same month last year.
Industrial production in August was up 0.4 per
cent. The IIP growth came mainly from the power
and mining sectors, while manufacturing was
only marginally better. The consumer durables
segment contracted 10.8 per cent in September.
39. Exports surge in Oct: Rising demand from the
US and the EU helped India’s merchandise
exports grow for the fourth month. Exports
posted a robust 13.47 per cent growth to $27.27
billion in October 2013. Imports continued to
decline bringing down the trade deficit to $10.5
billion during the month. This is almost half the
$20.21 billion registered in October 2012.

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Exports during the April-October period grew
6.32 per cent to $179.37 billion. Imports at $270
billion were lower by 3.8 per cent.
40. IRDA to set up insurance clearing house: IRDA
will set up an Insurance Clearing House to ensure
timely and effective reconciliation of inter-
company reinsurance and coinsurance balances
and efficient settlement of these balances. The
clearing house will be registered as a public
limited company under the Companies Act, 1956.
It will have a minimum paid-up share capital of
Rs 100 crore.
41. Posco gets more time to complete Odisha SEZ:
South Korean steel major Posco has got time till
next year to acquire land and disburse
compensation for its proposed multi-product
Special Economic Zone in Odisha. Posco proposes
to invest $12 billion in the SEZ, one of the largest
foreign direct investments to be brought into the
country.
42. The SEZ project proposes to produce 63,48,000
tonnes of finished steel products per year and
provide direct employment to about 18,000
people and indirect employment to 30,000 more.
43. Oxford arm to set up university in Sanand
with Whistling Group: The university, which
opened its portals in 1096, is planning a higher-
education campus through its wholly-owned
subsidiary, Isis Innovation Ltd. Isis will be
partnered by the Whistling Group. This
independent, industry-focused university will
offer courses in alternative energy and
environmental studies.
44. CSIR set to open TechVills in rural areas: The
Council for Scientific Industrial & Research
(CSIR) is gearing up to establish a chain of 28
TechVills in rural areas. These TechVills, to be
spread across the country, will showcase
technologies suitable for application in specific
areas.
45. Govt plans survey-based data collection for
services sector: The Central Statistics Office
(CSO) and the Directorate General of Commercial
Intelligence & Statistics (DGCIS) are conducting
domestic pilot surveys on services data collection
in areas such as tourism and health. India, like
many other developing countries, has inadequate
data on services. It is a big handicap while
negotiating Free Trade Agreements with other
countries and also framing domestic policies for
the sector.
46. Competition panel okays Jet-Etihad deal: The
Competition Commission of India has given
clearance to sale of stake by Jet Airways to Etihad
Airways. The Commission is of the opinion that
the proposed combination is not likely to have
appreciable adverse effect on competition in
India.
47. Vegetables push retail inflation over 10%:
The Consumer Price Index (CPI) touched 10.09
per cent in October, up from 9.84 per cent in
September. Prices of vegetables shot up a 45.67
per cent against 10.74 per cent in October 2012.
48. Retailers seek fixed 20% margin on drugs:
According to retailers, due to drastic cut in
prices of about 350 drugs following the Drug
Price Control Order, their gross average margins
fell to 14-16 per cent and that of stockists to 8.5
per cent.
49. Capital infusion by Govt is key to PSU banks’
ratings: As per India Ratings & Research, public
sector banks would depend more on capital
infusion from the Government, as their capital
ratios could be impacted by falling internal
accruals along with pressure on loan portfolio.
The Government and Life Insurance Corporation
of India (LIC) injected about 95 per cent of equity
into banks between FY10 and FY13. Any dilution
in the Government’s stance due to fiscal
pressures could have an immediate impact on the
ratings of weak banks. The Prime Minister’s
Economic Advisory Council, has suggested that
the Government to dilute its stake in its banks to
raise Rs 55,000 crore for equity injections.
50. SEBI panel for hiking mutual funds net worth
to Rs 25 cr: Market regulator SEBI’s mutual fund
advisory committee has recommended that fund
houses with assets under management (AUM) of
over Rs 1,000 crore should have a net worth of
Rs 25 crore. The current net worth requirement
for an asset management company (AMC) is Rs
10 crore. The committee has also suggested Rs
25 crore as the minimum net worth for new
applicants.
51. Inclusion of labour norms in free trade pacts
on the rise: According to a report by ILO, more
countries are now ensuring that Free Trade
Agreements lead to better working conditions. It
found that 58 trade agreements included labour
provisions in June 2013, up from 21 in 2005 and
four in 1995.
52. Company Secretaries may soon be called
governance professionals: As per Corporate
Affairs Minister Sachin Pilot, the Government
would move amendments in Parliament for a

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new nomenclature for company secretaries –
governance professionals. The Govt is sharpening
supervision of compliance procedures by
corporates through the proposed National
Financial Regulatory Authority.
53. Indian billionaires only half as wealthy as
Chinese counterparts: According to the report
on ultra high net worth individuals published by
Wealth-X and UBS, India is home to 103
billionaires with a combined wealth of $180
billion, six fewer individuals than the year before.
By contrast, China’s billionaire population grew
by 10 to 157, with a total wealth of $384 billion.
The US has the largest number of billionaires,
515, representing nearly a quarter of the total
global billionaire population, with a combined
wealth of $2,064 billion. Mumbai is home to
2,135 of India’s richest individuals, followed by
New Delhi (1,980), Bangalore (1,980), Kolkata
(635), Hyderabad (540) and Chennai (385).
54. Life insurers back on growth path after 3
years: According to IRDA, after three years of
decline, life insurance business is back on the
growth path. The industry witnessed a steep fall
in business after the introduction of new
guidelines in September 2010 for unit-linked
insurance plans, stipulating, among others, lower
commission for agents and higher lock-in periods
. Unit-linked plans, at that time, accounted for
over 80 per cent of business of private life
insurers.
55. Commerce Ministry allays fears on free trade
pacts: The Commerce & Industry Ministry has
clarified that India’s Free Trade Agreements
(FTAs) with most trading partners have resulted
in an increase in exports and not caused any
adverse impact on the manufacturing sector.
Most regional and bilateral FTAs signed by India
either related to SAARC countries or to South
East Asia and North East Asia. In case of SAFTA,
India has a trade surplus of about $12 billion.
With Asean, exports have more than doubled
after signing of the Indo-Asean Trade in Goods
Agreement in 2009, though imports have also
grown. A significant part of India’s imports from
this region were in essential items such as edible
oils from Malaysia and Indonesia and petroleum
products and coke from Indonesia.
56. India, US launch agri training programme
with Africa: The US and India have launched the
third India-US-Africa triangular agricultural
training programme at the National Institute of
Agricultural Extension Management (MANAGE)
Hyderabad. This partnership, supported by the
US Government’s global hunger and food security
initiative ‘Feed the Future’, aims to improve
agricultural productivity and support market
institutions in Kenya, Liberia, and Malawi.
57. S&P affirms BBB-minus rating and negative
outlook: Global rating agency Standard & Poor’s
has affirmed its ‘BBB minus’ sovereign rating for
India, but the outlook remained negative. ‘BBB
minus’ is the last investment grade. A notch
lower will not only hurt foreign investment flows,
but Indian companies will also have to pay more
to borrow abroad. Giving reasons for affirming
the rating, the agency listed strengths such as low
external debt, ample foreign exchange reserves
and an increasingly credible monetary policy. But
these strengths, were counter-balanced by the
onerous burden of its public finance, lack of
progress on structural reforms and shortfalls in
basic services.
58. Service tax noose to tighten on specific
sectors: The Finance Department will closely
monitor service tax compliance in sectors
identified as ‘chronic tax evasion’. These sectors
include renting of immovable property,
construction and real estate, information
technology, mining, advertisement and storage
and warehousing.
59. Direct plans of mutual funds not a hit with
retail investors: From January 1, 2013, all
mutual funds were asked to offer a new Direct
Plan with their schemes so that investors could
bypass the services of a distributor, save on costs
and thus earn higher returns from their funds.
But 10 months on, while a good number of
institutions and affluent investors have moved
their money into direct plans, very few retail
investors have made the shift.
60. CAG becomes member of UN audit panel: The
Comptroller and Auditor General of India Shashi
Kant Sharma has been elected to the coveted
United Nations Board of Auditors for a six-year
term. India will replace China beginning July 1,
2014. The CAG of India will now get access for
audit of the UN organisations, including the UN
Headquarters. India was earlier in the Board for
six years from 1993.
61. US pushes India again for early phase-out of
textile sops: India will have to start phasing out
its textile subsidies soon to conform with the
Subsidies Agreement of the World Trade
Organisation. While export subsidies are
prohibited under WTO rules, the multilateral
trade body allows countries with per capita
income below $1,000 to give such incentives till
exports are lower than 3.25 per cent of world
trade in that particular commodity. India’s share
in the global market for textiles crossed the limit
in 2007, according to WTO records, and is almost
four per cent at the moment. However, since
countries are given eight years to remove the
subsidies, India has time till 2015 to do so.

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62. Oil Ministry wants FinMin to cut taxes on
branded petrol, diesel: The Ministry of
Petroleum & Natural Gas has requested the
Finance Ministry to review the duties levied on
branded auto fuels (petrol/diesel) to bring down
the price differential with non-branded or
regular fuels. This, will attract consumers to
branded fuels, which will help improve fuel
efficiency by about two per cent, resulting in
reduction in overall demand.
63. PM’s panel will drive execution of infra
projects: The Prime Minister’s Project
Monitoring Group will start supervising the
implementation of 99 infrastructure projects,
with investments worth Rs 3.6-lakh crore,
already cleared by it. The projects, cleared by the
PMG and the Cabinet Committee on Investments,
include Sterlite Energy Ltd’s project worth Rs
12,000 crore, Adani Mundra’s thermal power
plant worth Rs 9,900 crore, Lanco’s Rs 6,000-
crore facility, Mumbai Airport’s new terminal
worth Rs 12,000 crore and Jhajjar Power Ltd’s
project worth Rs 6,600 crore. Bank funds worth
about Rs 7-lakh crore are locked in these projects
that were stuck due to various reasons, including
environment clearance.
64. UK’s decision to scrap visa bond: The British
government has decided to scrap a controversial
£3,000 visa bond scheme for six Commonwealth
nations, including India.
65. Top 200 firms have fewer than 10% woman
staff: According to a survey by CII, women
employees account for less than a tenth of the
workforce in more than half of the top 200
companies by market capitalization. Such
companies mainly operated in sectors such as
mining, manufacturing, oil exploration,
construction and engineering. About 20 per cent
of the companies had women employees
accounting for 10-20 per cent of their staff
strength. Another 12 per cent of the companies –
mainly in the service sector had female staff
ranging between 20 and 40 per cent of their
workforce. Also, half of the companies surveyed
had at least one woman on their board of
directors. The Companies Act stipulates
appointment of at least one woman on the board
of a company.
66. Mars Orbiter lifts off successfully, begins 400-
million-km journey: India’s maiden mission to
Mars blasted off on 5th Nov from launch pad at
the Satish Dhawan Space Centre at Sriharikota in
Andhra Pradesh.
67. Jignesh Shah quits MCX: Jignesh Shah, promoter
of troubled National Spot Exchange Ltd (NSEL),
has stepped down as Non-Executive Vice-
Chairman of MCX. Shah, who recently quit from
the board of MCX Stock Exchange, also heads
Financial Technologies as Chairman and Group
CEO.
68. New Chairman for National Payments Corp: M.
Balachandran has been appointed chairman of
National Payments Corporation of India (NPCI),
taking over the reins from Infosys’ N. R. Narayana
Murthy.
69. CAD will be below $70 b this fiscal: According
to C Rangarajan, Chairman of the Prime
Minister’s Economic Advisory Council, India may
contain the current account deficit for 2013-14
below $70 billion, lower than 2011-12 level.
70. Manufacturing shrinks for third straight
month: HSBC’s manufacturing purchasing
managers’ index for India remained unchanged
in October, staying below 50 for the third
consecutive month. The index in October was at
September’s level of 49.6.
71. G.K. Pillai appointed Chairman of MCX-SX:
MCX Stock Exchange (MCX-SX) has appointed
Gopal Krishna Pillai, IAS (Retd), as the Chairman
and Thomas Mathew T, as Vice-Chairman of its
board of directors.
72. FDI may soon be allowed in e-retail services:
The Government may widen the scope of foreign
investment in e-retailing by allowing FDI in
services such as selling of financial products and
rail-ticket booking, in addition to transacting in
goods.
73. FIPB eases defence FDI norm: The Foreign
Investment Promotion Board (FIPB) has decided
not to reject proposals from a foreign company
only because it or any of its group companies or
their parent is under investigation in the country
or abroad. Clearance will be given without
prejudice to any existing or future civil or
criminal proceedings against the foreign investor
or its parent.
74. Decoding the numbers that drive food
inflation: Food inflation has increased since the
beginning of 2012. The rate of retail food
inflation for urban households has been higher
than the wholesale food inflation rate in recent
months. The general increase in food inflation is
being driven by protein-rich eggs, fish and meat,
which have experienced volatile but high
inflation; and, above all, vegetables. Other major
components of spending, like fuel and light, have

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seen a reduction in the overall inflation in the
past two years but, sufficiently high to keep the
retail inflation rate close to double digits. Retail
inflation remains significantly higher than
wholesale inflation and is much higher than core
inflation in particular, which has been sharply
reduced by policy and the slowdown.
75. Banks send notice to Delhi Airport Metro for
payment of dues: A consortium of lenders led by
Axis Bank which have a total exposure of Rs
1,800 crore has sent a notice to Delhi Airport
Metro Express Pvt Ltd (DAMEPL) for payment of
loans which have turned into non-performing
assets. The notices have been served on Reliance
Infrastructure Ltd and Delhi Metro Rail
Corporation (DMRC).
76. RBI asks banks to increase bad loan
provisions: The banking system’s provision
coverage ratio (PCR) has dropped below 50 per
cent, compared with 70 per cent two years ago.
RBI expects banks to maintain a high level of
overall provision, over and above the regulatory
requirement for individual loan losses.
Internationally, provisioning is 70-80 per cent.
77. NCAER report pegs fiscal deficit at 5.1%: The
National Council of Applied Economic Research
(NCAER) has pegged the government’s fiscal
deficit for this financial year at 5.1 per cent of
gross domestic product (GDP), against the
finance ministry’s estimate of 4.8 per cent. The
GDP growth is estimated at 4.8-5.3 per cent in
2013-14.
78. RBI to overhaul debt recovery process:
Speaking at Bancon 2013, RBI Governor Raghu
Ram Rajan said that RBI will announce measures
to ensure fair recovery for bankers and investors,
and to punish those trying to milk the system.
Other observations by him included – (i)
Promoters were taking undue advantage of the
debt restructuring process; (ii) Bank
management with limited tenure keeps on
extending and evergreening a loan so that one’s
successor has to deal with it; (iii) the practice of
transfer of top management among public sector
banks (PSBs) could be reviewed; (iv) Country’s
industrial sector had come a long way and there
was no need to enter free-trade agreements that
give foreign manufacturers an undue advantage,
but there is no reason to give domestic
manufacturers protection.
79. Pakistan hints at MFN status, allowing more
products from India: The negative list which
became operational from March 21 last year
contains 1,209 items that India cannot export to
Pakistan, including pharmaceutical and
agricultural products. India can export around
7,500 items there. Pharmaceutical and
agricultural items are likely to be allowed to be
imported.
80. Inflation control still RBI's main agenda: As
per deputy governor of RBI, K C Chakrabarty,
cost of money is high whenever inflation is high
and growth is not sacrificed because of high
interest rates. Growth is sacrificed because of
high inflation. People will not save if the rate of
return is lower than inflation. If banks have to
give higher rates for mobilising deposits, then
they cannot lend money at lower rates.
81. FM wants bank licences to go to those with
innovative models: According to Finance
Minister P Chidambaram, the new banking
licences, expected to be given in January, would
be issued to applicants with innovative and
different banking models. According to FM, banks
are required to cater to different sections like
communities, tribal populations, Northeast,
urban poor, rural poor, farmer families, women.
It is, therefore, necessary to promote banks that
cater to these individual segments of people.
82. Banks' exposure to shadow banking entities
up in India: According to an international body
of financial regulators, India is among the
nations which have witnessed a marked increase
in the exposure of its banks to 'shadow banking'
entities, whose asset base globally grew to $71
trillion in 2012-end. Shadow banking system
refers to credit intermediation involving entities
and activities outside the purview of the regular
banking system.
83. Yogesh Agarwal's term as pension regulator
cut short: Yogesh Agarwal, chairman of the
Pension Fund Regulatory and Development
Authority (PFRDA), resigned about one-and-a-
half years before the end of his tenure.
84. India's netizens set to be world's second-
biggest internet user base: According to a
report released by the Internet and Mobile
Association of India (IAMAI) and market
research firm IMRB International, by June 2014,
Indians might outnumber American internet
users to become the world’s second-largest
online community after China.
85. Low cost distribution channel needed for
'Bank of future': According to McKinsey report,
‘Reimagining Banking in India: Gearing up to
meet the new environment’, banks need
innovation in their distribution channels to cater
to changing customer preferences, as well as
improve productivity and cost-efficiency. Total

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loans (as percentage GDP) extended to all
segments increased 103 per cent, from 0.29 per
cent in 2003 to 0.59 per cent in 2013. However,
despite the presence of nearly 90 scheduled
commercial banks in India, the extent of access is
still low, with about 35 per cent of India’s
population financially excluded, and only 28 per
cent of total bank retail credit being channelled
to rural and semi-urban areas, which constitute
87 per cent of the population. To become a “bank
of the future”, banking players should innovate in
three aspects---customer insights and
proposition, distribution and risk architecture.
Banks should leverage digital banking to cater to
high-value customers.
86. HRD ministry to set up 120 community
colleges: The human resource development
ministry will set up 120 community colleges,
based on community colleges in the US, to
provide academic and vocational training. India
has a gross enrolment ratio of 19 as compared to
a global average of 29.
87. Life insurers rush to revive lapsed policies: A
policy is considered lapsed if the premium is not
paid within the grace period. According to
Insurance Regulatory and Development
Authority (Irda) recommendations, a uniform
grace period of 30 days is extended for annual,
half-yearly and quarterly renewals, and 15 days
for monthly renewals. Renewals not just boost
renewal premiums, but also improve the overall
persistency rates of the life insurers. Persistency
is an indicator of the percentage of policies that
an insurer is able to renew in the 13th, 25th and
37th and 49th month of the policy term.
88. Centre plans 4 solar UMPPs of Rs 90,000 cr:
The Centre has proposed four ultra mega solar
power projects (UMPPs). These would be in
Rajasthan (4,000 Mw), Gujarat (4,000 Mw),
Kargil (2,000 Mw) and Ladakh (5,000 Mw).
These would cost Rs 90,000 crore.
89. Sumit Bose to become finance secretary:
Ratan P Watal is set to be the expenditure
secretary, while Revenue Secretary Sumit Bose
would be finance secretary on the retirement of
R S Gujral towards end of Nov 13.
90. Govt tells states to lower levy rice quota for
PDS: In a move that could increase the supply of
rice in the retail markets, the Centre has directed
states to reduce quota for levy rice, sold for
public distribution system (PDS), from the
existing 30-75 per cent to 25 per cent of the total
produce of millers in the current procurement
season. The government gets the rice for the
central pool to be distributed through PDS by
two ways: Custom-milled and levy rice. In CMR,
the government purchases husked rice from
farmers and then allocates it to mills for
processing for a fixed charge and rebuys again
from them. In the levy rice policy, millers are
allowed to sell a certain percentage (25–70 per
cent in major rice producing states) of rice
procured by them in the open market, while the
remaining (called levy rice) is collected by
government agencies at a minimum support
price (MSP).
91. RBI hikes ways and means advances limit of
states: The aggregate normal Ways and Means
Advances (WMA) limit for the state governments
has been increased by 50 per cent to Rs 15,360
crore. The current limit for state governments
and the Union territory of Pondicherry is at Rs
10,240 crore for the year 2013-14.
92. PM's council wants govt to cut stake in banks
to 51%: The Prime Minister's Economic
Advisory Council has recommended phased
dilution of government stake in public-sector
banks, from 58 per cent to 51 per cent, and
introduction of on-tap licensing of new banks.
The stake reduction would help raise the
additional capital required to implement the
Basel III norms.
93. Up to 10,000 killed in Philippines by super
typhoon Haiyan: Super typhoon Haiyan
destroyed about 70 to 80 percent of structures in
its path. Nearly 480,000 people were displaced
and 4.5 million "affected" by the typhoon in 36
provinces.
94. India to host 2 key multilateral meetings: The
first would be a trilateral dialogue between the

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foreign ministers of Russia, India and China, or
RIC, staring November 10. India would also host
another key meeting, the Asia-Europe Meeting
(ASEM) from November 11-12, with 36 foreign
ministers and 12 deputy foreign ministers from
Asia and Europe participating. ASEM represents
about 60 per cent of the world’s population, 52
per cent of the global gross domestic product and
68 per cent of global trade.
95. Forex reserves fall to $281.29 bn: India's
foreign exchange reserves fell in the week ending
November 1 by $1.66 billion to $281.29 billion.
96. India Inc sees red on voting rights for
preference shares: The Companies Act, 2013,
gives the same voting rights to preference
shareholders as to equity capital holders. This
will impact voting rights of all those companies
whose preference share capital is larger than
their equity capital. However, the Act is silent on
whether this will be with retrospective or
prospective effect.
97. Centre sets Rs 1-lakh-cr retail loan disbursal
target for PSBs: The finance ministry expects
public sector banks to disburse about Rs
1,00,000 crore of consumer loans at low rates.
98. RBI signs cooperation pacts with central
banks of Australia & NZ: RBI has signed
cooperation agreements with the central banks
of Australia and New Zealand for exchange of
information. With this, the apex bank had signed
such MoUs with 18 supervisors. The MoUs
provided for sharing of information on the health
of the supervised entities, cooperation between
the supervisors during on-site examinations,
frequent meetings between the supervisors and
preserving the confidentiality of information
shared.
99. FinMin shortlists EDs for top job in six govt
banks: The Union finance ministry has
shortlisted the names of executive directors
(EDs) likely to head public sector banks (PSBs) in
2014-15. The banks whose CMDs are likely to
retire in 2014-15 include Bank of Baroda (BoB),
Indian Overseas Bank (IOB), Canara Bank,
Oriental Bank of Commerce (OBC), Vijaya Bank
and United Bank of India.
100.Foreign bank subsidiaries get M&A, branch
freedom: As per guidelines issued by RBI,
Wholly Owned Subsidiaries of foreign banks
could acquire domestic private-sector banks, as
well as set up branches anywhere in the country.
These WOSes might be permitted to enter into
merger & acquisition (M&A) transactions with
any private bank in India, subject to the overall
foreign investment limit of 74 per cent. The
current law permits foreign investors to hold up
to 74 per cent stake in an Indian private bank,
but it does not allow a single entity to own more
than five per cent share in a local lender.
Currently, foreign banks need RBI’s permission
to open branches in the country. According to its
commitments to the World Trade Organization,
the central bank is required to allow only 12 new
foreign bank branches in a year. At present, 43
foreign banks have only 334 branches — mostly
in cities — less than 0.5 per cent of the banking
system’s total branch network.
101.Cyprus blacklisted for not sharing tax info:
The Centre has blacklisted Cyprus for not sharing
information about tax evaders. This would make
it difficult for Indian residents to do business
with the tax haven.
JAN 2014
1. Sumit Bose is new Finance Secretary: Sumit
Bose, has been designated as the new Finance
Secretary. He will continue to hold the post of
Revenue Secretary.
2. Harsh Bhanwala is new Nabard Chairman:
The Centre has appointed Harsh Kumar
Bhanwala as Chairman of the National Bank for
Agriculture and Rural Development (Nabard).
Prior to this appointment, Bhanwala was an
Executive Director at India Infrastructure
Finance Company Ltd (IIFCL), a state-owned
infrastructure lender. Bhanwala, succeeds
Prakash Bakshi, who retired as Nabard Chairman
in September.
3. C.V.R. Rajendran appointed CMD of Andhra
Bank: Prior to this elevation, Rajendran was
executive director at Bank of Maharashtra.
4. Arun Tiwari new CMD of Union Bank: The
Union Government has appointed Arun Tiwari as

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Chairman and Managing Director of Union Bank
of India. Prior to this elevation, Tiwari was an
executive director at Allahabad Bank.
5. Chairman IBA: K R Kamath is the Chairman of
Indian Banks Association.
6. Gold traders opt for jewellery imports to
tackle curbs on bullion:
7. Though Gold bullion attracts import duty of 10
per cent, and duty on gold jewellery is 15 per
cent, yet conditions attached to bullion imports
like ‘80:20 scheme’, under which merchants were
to re-export 20 per cent of each gold
consignment before ordering fresh shipments
makes import of bullion difficult.
8. Ministry clarifies on role of shares held in
fiduciary capacity: According to Corporate
Affairs Ministry, shares held by a company in a
fiduciary capacity should not be counted for the
purpose of determining holding-subsidiary
relationship. Further, the powers that a company
can exercise in another company in a fiduciary
capacity (only in the capacity as a trustee) will be
excluded for determining holding-subsidiary
relationship.
9. Bank of India plans to get into merchant
banking: Bank of India is planning to enter the
merchant banking space via BOI Shareholding
Ltd. Public sector banks which have a merchant
banking subsidiary include State Bank of India,
IDBI Bank and Bank of Baroda.
10. Pradeep Kumar is new MD of SBI: P. Pradeep
Kumar has been appointed by the Government as
Managing Director of State Bank of India. Prior to
his elevation, Kumar was the Deputy Managing
Director and Group Executive of the Corporate
Banking Group in India’s largest bank.
11. Cabinet nod for cancer institute at Jhajjar: The
Union Cabinet, has approved the proposal to set
up a National Cancer Institute at a cost of Rs
2,035 crore. The institute, which would be set up
at the Jhajjar campus of the All India Institute of
Medical Sciences in Haryana, is likely to be
completed within 45 months.
12. Insurance broking: In major relief to insurance
companies without bancassurance partners, the
finance ministry has asked all public sector banks
to act as insurance brokers to boost insurance
penetration in the country. Currently, insurance
penetration (the ratio of the percentage of total
insurance premia to gross domestic product) is
about five per cent. The ministry has advised
banks to leverage their branch network for
insurance penetration. The corporate agency
model should be done away with and each bank
to train and orient its staff to conform to new
provisions. Currently, bancassurance follows the
corporate agency model, through which a bank
can only tie up with one life, one non-life and one
health insurer to sell their insurance products.
Therefore, non-bank promoted insurance
companies and late entrants to the insurance
sector do not have any bank partner to sell their
policies. As an insurance broker, a bank is liable
to consumers, in terms of an insurance policy,
unlike a corporate agent. The liability is high,
especially as the bank will sell products of
multiple insurers. The customers will now have
more choice while buying insurance from banks.
The Finance Ministry has set January 15 as the
deadline for banks to start selling products of
more than one insurance company.
13. 8.8 m families live in urban slums: As per a
survey conducted by National Sample Survey
Office (NSSO), about 8.8 million household in
India live in urban slums. A total of 33,510 slums
are present in urban India, of which 41 per cent
are notified as slums by the concerned
municipalities, corporations, local bodies or
development authorities which accommodate
about 63 per cent of all slum-dwelling
households. Maharashtra, accounts for 23 per
cent of all slums in the country. With 13.5 per
cent of slums, Andhra Pradesh comes second,
followed by West Bengal (12 per cent).
14. Over 80% of rural homes have power, but
60% have no toilets: As per Government data,
80 per cent of rural households and 97.9 per cent
urban households had electricity for domestic
use, and 88.5 per cent households in rural India
and 95.3 per cent in urban areas had improved
source of drinking water. The percentage of
households who get drinking water facilities
within premises was 46.1 per cent in rural India
and 76.8 per cent in urban India while about 62.3
per cent of rural households and 16.7 per cent of
urban households did not have any bathroom
facility. 59.4 per cent and 8.8 per cent households
in rural and urban India, respectively, had no
latrine facilities.
15. Govt draws up list of 23 countries for
currency swap arrangement: The Commerce
Ministry has finalised a list of 23 countries with
which India can trade in local currencies to save
precious foreign exchange and strengthen the
rupee. The list includes oil exporting nations such
as Angola, Algeria, Nigeria, Oman, Iran, Iraq,
Venezuela, Qatar, Yemen and Saudi Arabia. Other
countries on the list include Russia, Japan,
Singapore, Australia, Indonesia, South Korea,
Malaysia, Mexico, South Africa and Thailand. A
currency swap arrangement for trade basically
involves trading in local currencies where
countries pay for exports and imports with

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domestic currencies at pre-determined exchange
rates instead of trading in US dollars.
16. Women gaining ground in banks’ financial
inclusion: The share of female depositors has
increased to 28 per cent of the total number of
individual deposit accounts in 2012 against 24
per cent in the previous year. The total number of
individual deposit accounts in the country stood
at 77.32 crore in 2012 against 72.50 crore in the
previous year. In terms of amount, women’s
share in the total individual deposits has
improved to 26 per cent in 2012 from 22 per cent
in 2011. In 2012, individual deposits aggregated
Rs 30.78 lakh crore against Rs 28.05 lakh crore in
the previous year. The share of female loan
accounts in the total number of loan accounts has
gone up to 15.82 per cent in 2012. Women’s
share in the total outstanding loans (individuals)
has risen to 18 per cent in 2012 against 15 per
cent in 2011. The total outstanding loans in the
case of individuals aggregated Rs 11.69 lakh
crore in 2012 against Rs 9.63 lakh crore in 2011.
17. Insurance policy will cost more from Jan 1:
The Government has widened its service tax net
to cover the policy premiums paid. Service tax
rates will be 12.36 per cent on Unit-Linked
Insurance Polices (only on charges, such as
mortality and administration), 3.09 per cent on
traditional products as most of the premium goes
into savings, and 12.36 per cent on term plans.
18. SEBI proposes framework for infra trusts: To
aid the financing and refinancing of long-term
infrastructure projects in India, the capital
market regulator SEBI has proposed a
framework for the introduction of infrastructure
investment trusts (InvIT). According to the 12th
Five Year Plan, India requires an investment of
Rs 65 lakh crore in infrastructure between 2012
and 2017. SEBI suggested that the trust could
either be floated using the mutual fund structure
or through a separate structural framework.
19. Consumer inflation linked bonds: Inflation
Indexed National Savings Securities - Cumulative,
seek to protect savings from price rise, by
offering returns over and above inflation at the
retail level. Only retail investors can buy these
bonds. The minimum investment size is Rs 5,000.
The interest rate is the sum of the prevailing
inflation based on the combined consumer price
index (CPI) and a fixed rate of 1.5 per cent
annually. The inflation rate will be reckoned with
a lag of three months, with the September CPI
used in December, and so on. Interest on the
bonds will not be paid out but compounded on a
half-yearly basis.
20. SME varsity to come up in Hyderabad: A
national Small and Medium Enterprises (SME)
university will be soon set up at Hyderabad.
Another technical training institute was also
being set up in Visakhapatnam at an investment
of over Rs 150 crore.
21. Sidharth Birla is new FICCI President: Sidharth
Birla was elected as President, FICCI, after the
industry chamber’s 86th Annual General
Meeting.
22. Misuse of bank guarantees, letters of credit
on the rise: Due to rising incidents of frauds,
banks are not in favour of issuing non-fund based
facilities, such as bank guarantees and letters of
credit, to non-customers.
23. CCEA ups gas price for RIL subject to bank
guarantee: The Cabinet Committee on Economic
Affairs (CCEA) approved a Petroleum and Natural
Gas Ministry proposal to allow RIL to sell KG-D6
block gas at the new price effective April 2014. It
also decided against putting any cap/floor price
on the gas rates and to maintain the gas price
formula approved earlier. RIL can now get the
benefit of the revised gas price in return for a
bank guarantee for the unmet supply
commitment from its KG-D6 block.
24. Cabinet approves Rs 6,600-cr interest-free
loans for sugar mills: The Cabinet Committee
on Economic Affairs has approved Rs 6,600 crore
interest free loans to sugar mills to ease their
cane payment burden. The CCEA also approved
the exports of sugar without any quantitative
restrictions.
25. Lok Sabha passes landmark Lokpal Bill: The
Parliament on 18th Dec passed the Lokpal Bill,
paving the way for the setting up of anti-
corruption watchdogs at the Centre and State
level. The Bill was passed by Lok Sabha on 18th
Dec and by Rajya Sabha on 17th Dec. Highlights of
the Bill include – (a) The Lokpal will consist of a
chairperson and a maximum of eight members, of
whom half will be judicial members; (b) Fifty per
cent of the Lokpal members shall be SC/ST/OBCs,
minorities and women; (c) The chairperson and
members will be chosen by a selection committee
consisting of the Prime Minister, Speaker of the
Lok Sabha, Leader of the Opposition in the Lok
Sabha, Chief Justice of India or a sitting Supreme
Court judge nominated by the CJI, and an
eminent jurist to be nominated by the President
of India on the basis of recommendations of the
first four members of the selection committee;
(d) The jurisdiction will include all categories of

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public servants and incorporate provisions for
attachment and confiscation of property acquired
by corrupt means, even while prosecution is
pending; (e) Setting up of Lokayuktas through
enactment of a law by the State Legislature
within 365 days from the date of commencement
of the Act.
26. Rename company secretaries as ‘governance
professionals’: The Company Secretaries
Institute has written to the Corporate Affairs
Ministry suggesting that their members may be
rechristened as “governance professionals”.
27. Status quo on repo rate, CRR: RBI maintained
status quo on the repo rate at 7.75 per cent and
cash reserve ratio (CRR) at 4 per cent in its policy
announced on 18th Dec. Explaining the rationale
for not hiking the rate in the mid-quarter policy,
RBI Governor stated that both retail and
wholesale inflation have increased mainly on
account of food prices and vegetable prices are
likely to fall both at the wholesale and retail
levels.
28. Tesco to invest $100 million in multi-brand
retail stores: British retailer Tesco Plc became
the first global retailer to seek the Government’s
nod to enter multi-brand retail trade segment.
Tesco plans to pick up a 50 per cent stake in
Trent Hypermarket Ltd, a retail arm of the Tata
group, and enter the multi-brand retailing arena.
The stores will operate under the names Star
Bazaar, Star Daily or Star Market, and the first
few will come up in Maharashtra and Karnataka.
29. RBI plans carrot-and-stick approach to curtail
bad loans: To spur banks/financial institutions
to agree collectively and quickly to a plan of
resolution of stressed assets, RBI may consider a
liberal regulatory treatment including spreading
the loss on sale of the asset over a period of two
years; allowing takeout financing/refinancing
over a longer period and not considering the
same as restructuring. In case lenders cannot
reach an agreement on resolution of stressed
assets then they will be subject to accelerated
provisioning. Before a loan account turns into a
non-performing asset (NPA), banks should
identify incipient stress in the account by
creating a new sub-asset category — Special
Mention Accounts (SMA) - a standard account,
which is moving towards the substandard
category. SMA will have three sub-categories —
SMA-NF (classified on the basis of non-financial
signals); SMA-1 (when principal or interest
payment is overdue between 31-60 days); and
SMA-2 (when principal or interest payment is
overdue between 61-90 days). The RBI also plans
to set up a Central Repository of Information on
Large Credits (CRILC) to collect, store, and
disseminate credit data to lenders. Banks will
have to furnish credit information to CRILC on all
their borrowers having aggregate fund-based
and non-fund-based exposure of Rs 5 crore and
above. Systemically important non-banking
finance companies (NBFC-SIs) will also be asked
to furnish such information. In addition, banks
will have to furnish details of all current accounts
of their customers with outstanding balance
(debit or credit) of Rs 1 crore and above. The
reporting of an account as SMA-2 by one or more
lending banks/NBFC-SIs will trigger the
mandatory formation of a Joint Lenders’ Forum
(JLF) and formulation of Corrective Action Plan
(CAP). JLF formation would be made mandatory
for distressed corporate borrowers with
aggregate fund-based and non-fund based
exposure of Rs 100 crore and above. The options
under the CAP by the JLF would generally
include: rectification (for regularising the loan
account), restructuring and recovery (when the
first two options fail).
30. Relief to banks on asset sales to ARCs: As per
RBI, the excess provision on any bad loan which
is sold to an asset reconstruction company (ARC)
for a higher value can be reversed to the bank’s
profits.
31. Inflation hits 14-month high: Surging food
prices pushed November wholesale price index-
based inflation to a 14-month high of 7.52 per
cent. Food inflation shot up a huge 19.93 per cent
— a near-four-year high. It had risen 18.19 per
cent in October. Vegetable prices shot up an
alarming 95.25 per cent in November compared
with 78.38 per cent in the previous month.
32. India for food security subsidies out of WTO
actionable sops ambit: India will push for
complete exclusion of subsidies given under
public stock holding programmes from the
category of actionable subsidies at the World
Trade Organisation. India has managed to get
only an interim reprieve from legal action against
such breaches at the recently concluded
Ministerial Meeting in Bali.
33. Third home loan as a commercial real estate
advance: The National Housing Bank has
suggested to the Finance Ministry that home
loans provided to a borrower for the third time
should not be treated as commercial real estate
advance. According to R. V. Verma, Chairman and
Managing Director, NHB, such an approach

21.
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would help improve housing stock in the country
and also give a fillip to the rental housing market.
NHB is the housing finance regulator of the
country.
34. SMS alerts: Banks prefer to charge a flat rate:
Instead of linking the charges to the number of
transaction alerts received by customers, banks
are weighing the possibility of recovering Rs 5-10
a month from those opting to receive the alerts
via SMS.
35. Centre to review RBI powers as part of
financial sector reforms: The Financial Sector
Legislative Reforms Commission (FSLRC) has
proposed a financial regulatory mechanism
comprising the RBI, Unified Financial Agency,
Financial Sector Appellate Tribunal, Resolution
Corp, Financial Redressal Agency, Public Debt
Management Agency and the Financial Stability
Development Council. Under the proposed
regulatory structure, the RBI will perform the
functions of monetary policy, regulation and
supervision of banking and payment systems.
The Financial Stability Development Council will
function in the systemic risk and development
category.
36. I-T dept stakes claim to Kingfisher assets: The
Income Tax Department has said a consortium of
banks cannot stake any claim to the assets of
Kingfisher Airlines until the department’s dues of
over Rs 350 crore are settled.
37. Govt offers more concessions under rural jobs
scheme: Union Minister for Rural Development
Jairam Ramesh has announced that – (a) every
job card holder under MNREGA, will be entitled
to Rs 10,000 to build an individual toilet. At
present, a job card holder can avail Rs 4,500 to
build a toilet; the Centre will provide assistance
for the construction of buildings for women self-
help federations; MNarega scheme will be
converged with the Indira Awas Yojana and other
housing schemes for the poor; (d) to allow the
building of community storage facilities for
agriculture produce in gram panchayats to link
the MGNREGS with the Food Security Scheme; (e)
if wages are delayed beyond 15 days,
compensation at 0.05 per cent of wage per day of
delay will be paid and this amount will be
deducted from the salary of the responsible
personnel.
38. Public sector banks may have to set up
insurance broking arms by February: At
present, banks are allowed to tie up with only
one insurance company and sell products of only
that insurer under the corporate agency
(bancassurance) channel. According to Financial
Services Secretary Rajiv Takru, all insurance
products should be available through the one-
lakh-plus bank branches. According to the
guidelines finalised by the Insurance Regulatory
and Development Authority, as brokers, banks
will have to cap business from their own group
companies at 25 per cent for life insurance and a
similar cap for non-life insurance business. Most
major public sector and private sector banks,
such as State Bank of India, Union Bank of India,
Bank of Baroda, Canara Bank, Bank of India,
Punjab National Bank, Andhra Bank, ICICI Bank
and IDBI Bank, have promoted insurance
companies. Most banks are not in favour of
broking as many of them had promoted
insurance companies. Also, they will have
fiduciary responsibility towards the customer
while selling insurance products under the
broking regulation.
39. ATM density still low in India: According to RBI
data outlining global financial inclusion
indicators for 2011, there are just 25.4 machines
in every 1,000 sq. km in India. This translates
into 8.9 ATMs for every one lakh population, one
of the lowest densities in the world. Bank
customers in China have access to 2,975
machines in the same geographical expanse, with
49.6 ATMs per one lakh population. In UK, ATM
density stands at 261 per 1,000 sq km. But the
number of ATMs per 1 lakh population is higher
at 122.8 ATMs. ATM density in populous
Malaysia stands at 34 per 1,000 sq km, with 56.4
machines per 1 lakh population. While the
density in terms of machines per 1,000 sq km is
lower in countries, such as Indonesia, Mexico and
the Philippines, they have more machines per
one lakh people owing to the lower population.
However, in terms of bank branch density, India
fares better than many developing countries.
Bank branch density in India is 30.4 per 1,000
km, compared to just 9.6 in the US, 3.1 in South
Africa and 7.9 in Brazil. China ranks highest in
terms of bank branch density.
40. Funding for ‘specialised’ entities: RBI, in its
discussion paper on resolution of NPAs, has
stated that RBI will allow banks to extend finance
to ‘specialised’ entities put together for
acquisition of troubled companies. However, the
lenders should ensure that these entities are
adequately capitalized. The Reserve Bank will
withdraw the minimum holding period for any
initial loan sale. However, the bank purchasing